Surprised by the USD’s lack of reaction to PPI and Initial claims data? Me too.
We know PPI doesn’t usually see the same type of volatility as we would see with CPI data of course, but the numbers were punchy.
It wasn’t just the PPI numbers which were much softer than expected, but Initial Claims jolted higher as well, and is showing the first real signs of concerns going back to June 2023.
So, what’s up with the USD pushing higher after data like this?
I think the USD got caught in the risk sentiment crossfire, with another increase in risk premiums across Europe.
The French/German 10-year spread jolted to 0.70%, while the BTP/Bund was up close to 1.5% again, with the EUR and European equities taking the punch.
US bonds caught a solid bid (also helped by the solid 30-year auction from the US).
So, all-in-all, I think if it was a ‘normal’ day (which it never is of course), I would have expected more softness for the USD following yesterday’s data, especially after the CPI data we saw on Wednesday.
